Tax

The enactment of the 2017 Tax Cuts and Jobs Act represented the first major tax reform since the 1980s. These tax reforms were largely focused on reforming the corporate and business tax codes that over the past 30 years had become outdated as compared with other emerging and developed nations.

Most of these tax reforms will have a profound impact on the scrap recycling industry.

Below is a list of the major tax reforms that ISRI worked hard to secure:

• A move to territorial system with base erosion rules
• Lowers corporate tax rate permanently to 21 percent in 2018
• Establishes of a 20 percent deduction for pass-through businesses
• Provides full and immediate expensing of capital investments for five years
• Increases Section 179 Expensing Cap from $500,000 to $1 million
• Retains trade and tax incentives (IC-DISC)
• Enacts repatriation of foreign-source income at 15.5 percent and 8 percent (illiquid)
• Limits net-interest expensing to 30 percent of earnings before for four years (Interest, taxes, depreciation (EBIT) and amortization (EBITA))
• Abolishes corporate alternative minimum tax
• Retains interest charge-domestic international sales corporation (IC-DISC)
• Eliminates Domestic Production Tax Credit (Section 199) After 2018

Congress passed the American Jobs Creation Act in 2004 ("Jobs Creation Act"). Title I of the Jobs Creation Act had two purposes: first, it repealed the Exclusion for Extraterritorial Income (ETI) as required by a decision of the World Trade Organization (WTO) and second, it added § 199 to the Internal Revenue Code (IRC) of 1986. Section 199 was intended, in part, to compensate U.S. exporters for the tax benefits they would lose as a result of the repeal of the exclusion for ETI and also to encourage certain businesses to create jobs. Unfortunately, the Internal Revenue Service (IRS) has interpreted § 199 in a manner that effectively vitiates the ability of scrap recyclers to claim the deduction, despite the fact that the scrap recycling industry is, and has been for decades, one of the United States largest net exporters, subjecting a large number of recyclers to huge deficiency assessments upon audit.

White Paper

Recycling Investment Saves Energy (RISE) allows taxpayers to claim accelerated deprecation for the purchase of machinery or equipment used to collect, distribute or recycle a variety of commodities such as scrap plastic, scrap glass, textiles, scrap rubber, scrap ferrous and nonferrous metals, or electronic scrap.

RISE FAQs

RISE Act